NDR 2019: Singapore will be 'principled' in approach to China-US trade dispute; ready to help workers
The Government will respond with "appropriate interventions" if the economic situation gets much worse, said Prime Minister Lee Hsien Loong in his National Day Rally speech in Mandarin.
(Updated: )
Danny Lum
1. Agree that Singapore should adopt a "principled approach" and not take sides in US-China geopolitical tussles.
2. Reasons being :-
- Singapore is a Sovereign Country, nulti-racial and we have own National Interest to protect and safeguard.
- Singapore must be careful not to take sides or seen to be taking sides.
- Hence adopting "principle approach" as Singapore position become vital - so that Singapore stands are seen to be :-
(a) credible
(b) trustworthy
(c) consistent
irregardless of which Countries we deal with - whether US, China or other Countries.
- Our "principle approach" must have the following ingredients :-
(a) It must protect Singapore National Interest
(b) Our principle must be wholesome, fair and just.
(c) Our principles must be the core values that we all believe in and live with.
eg. We value multi-racial and religious harmony, we value a clean and uncorrupt system, we value meritocracy but will help others who fall behind to uplift and catch up, we value integration and diversity, we value a democratic system, we value a compassionate society, we value trade, business, investment, free trade agreement, multi-lateral system, we value mutual benefits and win-win outcome with all Countries for mutual peace and prosperity.
We do not want protectionism, unilateralism etc - that impede trade, business, investment.
eg. We value "Friends with All, Adversaries with None.
Forge mutual benefits with Win-Win outcome".
3. Singapore must not be afraid to convey our "principle approach" in International Forum - to win international friends over (at the backdrop of international confrontation, conflict and jostling).
And Singapore can be an oasis in the vast desert of hostility.
2. Reasons being :-
- Singapore is a Sovereign Country, nulti-racial and we have own National Interest to protect and safeguard.
- Singapore must be careful not to take sides or seen to be taking sides.
- Hence adopting "principle approach" as Singapore position become vital - so that Singapore stands are seen to be :-
(a) credible
(b) trustworthy
(c) consistent
irregardless of which Countries we deal with - whether US, China or other Countries.
- Our "principle approach" must have the following ingredients :-
(a) It must protect Singapore National Interest
(b) Our principle must be wholesome, fair and just.
(c) Our principles must be the core values that we all believe in and live with.
eg. We value multi-racial and religious harmony, we value a clean and uncorrupt system, we value meritocracy but will help others who fall behind to uplift and catch up, we value integration and diversity, we value a democratic system, we value a compassionate society, we value trade, business, investment, free trade agreement, multi-lateral system, we value mutual benefits and win-win outcome with all Countries for mutual peace and prosperity.
We do not want protectionism, unilateralism etc - that impede trade, business, investment.
eg. We value "Friends with All, Adversaries with None.
Forge mutual benefits with Win-Win outcome".
3. Singapore must not be afraid to convey our "principle approach" in International Forum - to win international friends over (at the backdrop of international confrontation, conflict and jostling).
And Singapore can be an oasis in the vast desert of hostility.
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Danny Lum
(1) Someone suggested to draw on our vast reserve, if the US-China trade war turn bad and impact on our Economy.
(2) However, I will like to urge caution in drawing on our vast reserve - when things start to turn bad.
(3) Our reserves are the "Goose that lay the golden eggs" - and should be used only as the "last resort" - not "1st use" the moment things turn bad.
(4) Our reserves have been carefully invested - to earn very good return income from long run to short term - and this has helped to produce substantial NIRC (Net Investment Return Contribution) (half of all investment income from our Sovereign Fund) every year to the Government fiscal budget to fund Government spendings.
In return, taxpayers do not have to pay higher taxes as NIRC is the largest contributor of Government revenue.
(5) If we encourage our Government to draw on the reserves, then our Sovereign Capital will be depleted - and there will be less capital to invest to earn more investment income and our NIRC will be greatly reduced - and this mean taxpayers will have to pay higher taxes.
(6) It is more prudent for the Government to draw on budget surplus to fund "any emergency" should the Economy enter into technical recession - rather than drawing into the reserves.
As a point to note, so far there is only once the Government has drawn on the reserve - and if I am not wrong - is the 1985 deep recession where every sector of our Economy are badly hit - as we did not reform our wage structure fast enough and need emergency relief to keep all the business and workers afloat - while we do restructuring.
However, when our Economy recover, the Government quickly repay the fund borrow from the reserve plus interest - to keep our reserves intact and not depleted.
(2) However, I will like to urge caution in drawing on our vast reserve - when things start to turn bad.
(3) Our reserves are the "Goose that lay the golden eggs" - and should be used only as the "last resort" - not "1st use" the moment things turn bad.
(4) Our reserves have been carefully invested - to earn very good return income from long run to short term - and this has helped to produce substantial NIRC (Net Investment Return Contribution) (half of all investment income from our Sovereign Fund) every year to the Government fiscal budget to fund Government spendings.
In return, taxpayers do not have to pay higher taxes as NIRC is the largest contributor of Government revenue.
(5) If we encourage our Government to draw on the reserves, then our Sovereign Capital will be depleted - and there will be less capital to invest to earn more investment income and our NIRC will be greatly reduced - and this mean taxpayers will have to pay higher taxes.
(6) It is more prudent for the Government to draw on budget surplus to fund "any emergency" should the Economy enter into technical recession - rather than drawing into the reserves.
As a point to note, so far there is only once the Government has drawn on the reserve - and if I am not wrong - is the 1985 deep recession where every sector of our Economy are badly hit - as we did not reform our wage structure fast enough and need emergency relief to keep all the business and workers afloat - while we do restructuring.
However, when our Economy recover, the Government quickly repay the fund borrow from the reserve plus interest - to keep our reserves intact and not depleted.
Danny Lum
(1) The US-China trade war has a sessimic impact on us because it :-
a. reduce global consumer demands as tariff will raise price (in US and other Countries who also retaliate with tariff).
b. with reduction in consumer demand, business will hold back more investment.
c. global supply chain will be disrupted - as business scramble to move their production plants to Countries that are not affected by the tariff.
--- all the above will reduce global consumption, business activities, dislocate supplier chain ---- as we can see from the "domino effects of economic performance from the Countries that rely heavily on trade".
Singapore unfortunately is one of them (as we are the "canary shaft of the coalmine").
(2) As Singapore's trade contribute to 3 times the size of our GDP, it is not easy to find replacement to soak up the aggregate consumer consumption given to us by trading with Global consumers - unless we discover another US or China with high consumer income.
(3) With this backdrop - for Countries with big consumer market, they can use fiscal policies and monetary policies to spur their domestic economy and boost domestic consumption to soak up the loss from trade.
(4) But for Singapore being a small domestic market of 5.56 million people - solely rely on fiscal budget and monetary policies to spur our domestic demand and prop up our Economy - will succeed in jumpstarting only some sectors (eg. construction sector, Government spendings to bring forth some long term projects or provide monetary relief for some businesses and workers).
But this stimulus measure will only be short-term relief - and will not help those sectors that are export based. Businesses in these sectors will still be in doldrum and jobs in these sectors will also threadin on thin water.
(5) To prevent businesses and jobs from taking a big hit from the trade war, Singapore Government should help businesses involve in trade and external businesses - to actively sniff out :-
a. new emerging market - especially those with huge domestic market with growing income.
b. new and evolving global supply chain - as businesses are re-configuring and re-calibrating to avoid the US-China trade war, Japan-S Korea trade & historical dispute etc.
c. exploiting Digital Economy and work with overseas Countries - to penetrate into un-explore market, rural areas, smaller towns etc (to grow trade and make use of digital finances).
d. encourage more local businesses or investors to work more closely with EDB, IE Singapore etc to penetrate established overseas market, overseas market eager to form new trading partners or overseas market yet to open up but keen to work with us.
(6) This will be tackling the problem head-on - by "holding the bull by the horn".
As other service sectors such as IT, banking, hospitality, retail etc are not affected - attention should be focused on the trade sector (remembering trade is 3 times our GDP).
Thus finding new, emerging export market ---- to tie over the US-China trade war will be essential.
As port activities, logistic hub, warehousing etc --- are all contingent on vibrant trade.
When the trade war dust finally settle down - at least - a new global supply chain - supplying goods and services to these "emerging trade market" --- will be a useful complement to the current US (Consumer market) - China (Manufacturing hub).
a. reduce global consumer demands as tariff will raise price (in US and other Countries who also retaliate with tariff).
b. with reduction in consumer demand, business will hold back more investment.
c. global supply chain will be disrupted - as business scramble to move their production plants to Countries that are not affected by the tariff.
--- all the above will reduce global consumption, business activities, dislocate supplier chain ---- as we can see from the "domino effects of economic performance from the Countries that rely heavily on trade".
Singapore unfortunately is one of them (as we are the "canary shaft of the coalmine").
(2) As Singapore's trade contribute to 3 times the size of our GDP, it is not easy to find replacement to soak up the aggregate consumer consumption given to us by trading with Global consumers - unless we discover another US or China with high consumer income.
(3) With this backdrop - for Countries with big consumer market, they can use fiscal policies and monetary policies to spur their domestic economy and boost domestic consumption to soak up the loss from trade.
(4) But for Singapore being a small domestic market of 5.56 million people - solely rely on fiscal budget and monetary policies to spur our domestic demand and prop up our Economy - will succeed in jumpstarting only some sectors (eg. construction sector, Government spendings to bring forth some long term projects or provide monetary relief for some businesses and workers).
But this stimulus measure will only be short-term relief - and will not help those sectors that are export based. Businesses in these sectors will still be in doldrum and jobs in these sectors will also threadin on thin water.
(5) To prevent businesses and jobs from taking a big hit from the trade war, Singapore Government should help businesses involve in trade and external businesses - to actively sniff out :-
a. new emerging market - especially those with huge domestic market with growing income.
b. new and evolving global supply chain - as businesses are re-configuring and re-calibrating to avoid the US-China trade war, Japan-S Korea trade & historical dispute etc.
c. exploiting Digital Economy and work with overseas Countries - to penetrate into un-explore market, rural areas, smaller towns etc (to grow trade and make use of digital finances).
d. encourage more local businesses or investors to work more closely with EDB, IE Singapore etc to penetrate established overseas market, overseas market eager to form new trading partners or overseas market yet to open up but keen to work with us.
(6) This will be tackling the problem head-on - by "holding the bull by the horn".
As other service sectors such as IT, banking, hospitality, retail etc are not affected - attention should be focused on the trade sector (remembering trade is 3 times our GDP).
Thus finding new, emerging export market ---- to tie over the US-China trade war will be essential.
As port activities, logistic hub, warehousing etc --- are all contingent on vibrant trade.
When the trade war dust finally settle down - at least - a new global supply chain - supplying goods and services to these "emerging trade market" --- will be a useful complement to the current US (Consumer market) - China (Manufacturing hub).
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Danny Lum
(1) I am not counting on the 2020 Presidential Election to change the current US administration - that has trigger the slowdown in Global Economy because :-
a. This is something outside our control - only their voters can decide their Presidential choice.
b. Looking at the fervor of protectionism, nationalism - and their support of erratic candidate not based on rational logic --- I am not optimistic the current woe will change in 2020 ---- and we must not bank on this --- as we may have to stick with the current administration for another 4 years.
An another 4 years can cause alot of damage.
Because after US-China trade war (that could finally end - somewhere down the road), the US administration will pick another State(s) to fight --- and the next candidate could be EU, and then follow by others such as India, Vietnam etc.
(2) Thus we must rely on something that is within our control --- ie. to actively sniff out "emerging overseas market" to trade and buffer ourselves from the loss of the current US-China trade war and other trade war.
I am not sure by scouting and sniffing out a myraid of potential emerging overseas trade market can fully replace the 3 times GDP trade we used to enjoy - if we can cover 1.5 times or more --- it will already be a very good outcome.
And while doing so - hope for the best but work for the worst ---- rather than doing nothing and just wait.
a. This is something outside our control - only their voters can decide their Presidential choice.
b. Looking at the fervor of protectionism, nationalism - and their support of erratic candidate not based on rational logic --- I am not optimistic the current woe will change in 2020 ---- and we must not bank on this --- as we may have to stick with the current administration for another 4 years.
An another 4 years can cause alot of damage.
Because after US-China trade war (that could finally end - somewhere down the road), the US administration will pick another State(s) to fight --- and the next candidate could be EU, and then follow by others such as India, Vietnam etc.
(2) Thus we must rely on something that is within our control --- ie. to actively sniff out "emerging overseas market" to trade and buffer ourselves from the loss of the current US-China trade war and other trade war.
I am not sure by scouting and sniffing out a myraid of potential emerging overseas trade market can fully replace the 3 times GDP trade we used to enjoy - if we can cover 1.5 times or more --- it will already be a very good outcome.
And while doing so - hope for the best but work for the worst ---- rather than doing nothing and just wait.
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Adeline Cheo
Well spoken speech indeed. It does makes sense if the 2 big powers continues to fight and muscle flex weaker or smaller nations with their uncivil attitude and threats. Therefore it’s perfectly right to be principled and stay as neutral as possible.
Forcing one to take sides is tantamount to Child’s play behaving like kindergarten kids!!
Forcing one to take sides is tantamount to Child’s play behaving like kindergarten kids!!
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